events center complex feasibility study cal poly, san …

INSPIRE. EMPOWER. ADVANCE.
E V E N T S C E N T E R CO M P L E X F E A S I B I L I T Y S T U DY
CAL POLY, SAN LUIS OBISPO
AU G U S T 2 0 1 4 F I N A L R E P O R T
This Page Left Intentionally Blank
TABLE OF CONTENTS
A u g u s t 2 0 1 4 0 . 1
SECTIONS
B………...STR Hotel Survey
D………….Hotel/Conference Center Pro Forma & Outline Program
E………….Arena Development Budget (Form 2-7)
F………….Hotel/Conference Center Development Budget (Form 2-7)
SECTION 1
PREFACE
A u g u s t 2 0 1 4 1 . 1
1.0 - PREFACE
In December of 2013, California Polytechnic State University (“Cal Poly”) and Communitas LLC engaged Brailsford & Dunlavey (“B&D”) to analyze the market potential for an events center complex consisting of two primary projects: an events center arena and an integrated hotel, conference center, and museum. To complete this assignment, B&D conducted a market study for each project type that culminates in financial analyses with an outline program, project budget, and ten-year pro forma for each project type.
Q U A L I F I C A T I O N S
The findings of this study constitute the professional opinions of B&D personnel based on the assumptions and conditions detailed throughout. B&D analysts have conducted research using both primary and secondary sources which are deemed reliable, but whose accuracy B&D cannot guarantee. Due to variations in the national and global economic conditions, actual expenses and revenues may vary from projections, and these variances may be material.
T H E P R O J E C T T E A M W A S C O M P R I S E D O F T H E F O L L O W I N G I N D I V I D U A L S :
William Mykins, RA, LEED AP, Vice President
Matt Bohannon, Senior Project Manager
Bryan Slater, Project Manager
Monty Jarecke, Project Analyst
Throughout this process, B&D coordinated efforts with both the Cal Poly and Communitas LLC. B&D would like to give special thanks to the members and officials of each organization that helped coordinate the study. A list of these individuals is provided below:
Jeffrey D. Armstrong, President, Cal Poly
Betsy Kinsley, Chief of Staff, Cal Poly
Stan Nosek, Interim Vice President, Administration & Finance, Cal Poly
Deborah Read, Vice President, University Advencement, Cal Poly
Joel Neel, Director, Facilities Planning & Capital Projects, Cal Poly
Roberta Jorgensen, President, Communitas LLC
SECTION 2
EXECUTIVE SUMMARY
A u g u s t 2 0 1 4 2 . 1
2.0 – EXECUTIVE SUMMARY
BACKGROUND
The objective of this planning study is to analyze market potential for an events center and hotel/conference center on the campus of Cal Poly. B&D developed a detailed market analysis by first completing a local market conditions analysis which serves as the basis for separate demand analyses for both projects. Based on anticipated demand levels, B&D developed financial analyses for each project type. A summary of key findings is outlined below.
MARKET ANALYSIS
L O C A L M A R K E T C O N D I T I O N S
San Luis Obispo is located in San Luis Obispo County within California’s “Central Coast” region. Collectively, the county, city, and nearby communities makeup the San Luis Obispo-Paso Robles Metropolitan Statistical Area (MSA). The MSA is located roughly three hours between both the L.A. and San Francisco MSAs, effectively creating a modest niche market. To evaluate local market strength, B&D completed a demographic drive time analysis of the local market.
There are over 300,000 people within a 30-minute drive time of SLO, expanding to over 450,000 in a 60-minute drive time area. The vast majority of the population is concentrated to the south of the city. However, many of the regional sub-markets to the south have poor demographic characteristics for events center patronage. B&D believes the market catchment area for an events center, or area from which the project can expect to attract potential patrons, is similar to the 30-minute drive time population of 300,000 to 325,000.
In support of the drive-time demographic analyses, additional market characteristics such as employment mix, unemployment, and transportation statistics were analyzed to complete the
Category 30 Minutes 45 Minutes 60 Minutes California United States
Population 304,917 407,739 454,048 - - Annual Growth (Next Five Years) 0.53% 0.54% 0.50% 0.67% 0.68% Households 108,392 141,444 158,076 - - Average Household Size 2.65 2.75 2.75 2.89 2.58 Median Household Income $53,732 $53,477 $53,134 $57,385 $50,157 Median Age 36.5 36.1 36.0 35.8 37.3
Source: ESRI
Figures in 2012 unless otherw ise noted
E X H I B I T 2 . 1 : 3 0 - , 4 5 - , A N D 6 0 - M I N U T E D R I V E T I M E D E M O G R A P H I C S
CAL POLY SAN LUIS OBISPO | EVENTS CENTER COMPLEX FEASIBILITY STUDY
2 . 2 B R A I L S F O R D & D U N L A V E Y I N S P I R E . E M P O W E R . A D V A N C E .
hotel/conference center demand analysis and to a lesser extent, demand for the events center. Key findings are summarized below:
The university is the region’s second largest employer and, based on interviewee input, drives a significant portion of business- and group-related room night demand.
San Luis Obispo County’s unemployment rate in 2013 of 6.6% is low in comparison to both state (8.5%) and national levels (7.0%). The county also weathered recessionary conditions from 2007 to 2009 comparatively well. The stability is partially attributable to the mix of large employers heavily concentrated in education, healthcare, and municipal government.
San Luis Obispo County Regional Airport has adequate mountain-region air accessibility with flights to Los Angeles, San Francisco, and Phoenix. Air service is supplemented by rail service that provides access along the California coast.
San Luis Obispo’s mix of tourist attractions provides appeal to the region. However, the lack of suitable business and group-oriented hotel properties, discussed in full detail below, limits the size and scope of potential conferences and events.
E V E N T S C E N T E R M A R K E T A N A L Y S I S
The events center market analysis measures and evaluates the local market’s ability to support an events center project on the campus of Cal Poly. The facility would be home to the men’s and women’s basketball programs in addition to several outside events.
Conference & Attendance Analysis
To inform an appropriate capacity for the events center, B&D examined Big West Conference arenas in addition to attendance trends for the two programs expected to serve as tenants in the building. Average capacity for Big West arenas is just under 5,300. In the five most recent years, applicable Big West member schools averaged roughly 1,700 spectators per men’s basketball competition while Cal Poly averaged nearly 2,000. B&D also analyzed the effect that new arena projects had on men’s basketball attendance levels at select institutions around the nation and found that, on average, projects created a 32% increase in per game attendance.
Case Study Facilities
B&D identified five (5) case study facilities for analysis, though SECU Arena at Towson University represents the strongest comparable to the proposed event center project. SECU Arena was completed in 2013 at project cost of $56 million and contains 5,600 seats. Towson anticipates operating expenditures of $1.3 million for 2014. Naming rights to the venue were secured for 10
EXECUTIVE SUMMARY
A u g u s t 2 0 1 4 2 . 3
years at an aggregate value of $4.75 million. The five case study facilities average project cost was just over $51 million in 2013 costs, while operating budgets for the most recent year available range from a low of $900,000 to a high of $2.3 million.
Competitive Context
B&D identified eight (8) assembly venues within a three hour drive time from SLO that will compete for events or patrons. Competition for concerts, in particular, is significant due to the presence of venues in Santa Barbara, Fresno, and Bakersfield. Based on B&D’s understanding of the competition and interviewee input, the market niche is student-focused music concerts, a modest number of family shows, and six to ten annual rodeo and agrarian events.
Premium Seating
B&D reviewed premium seating offerings for eight (8) recently completed/renovated arenas with similarly positioned basketball programs. On average, facilities offer 67 courtside seats at a price point of $1,300, 450 club seats at $700, and 11 suites at $22,000. All prices are inclusive of ticket cost, required donations, and annual lease rate, but do not include tickets to outside events.
H O T E L / C O N F E R E N C E C E N T E R M A R K E T A N A L Y S I S
SLO Hotel Market Conditions
The City of San Luis Obispo market (“SLO market”) contains 29 hotel properties and nearly 2,100 rooms. The market is composed of niche, tourist-oriented boutique offerings in addition to an assortment of older economy (Super 8) and upper mid-scale (Courtyard by Marriott) properties. Throughout the interview process, the market was characterized by tourism officials and hoteliers as lacking sufficient options for business and group-oriented market segments.
The city-wide market outperformed the national market in terms of occupancy percentage in every year from 2007 to 2013, while also outpacing the national average in average daily rate (ADR) by at least seven percent (7%) in each year. The SLO marketplace is strongly seasonal due to its high composition of tourist-oriented leisure properties; accordingly, summer month occupancy peaks at 80% while winter month occupancy ranges as low as 50%. The SLO market ADR and occupancy in comparison to national measurements is shown in Exhibit 2.2.
Hotel Competitive Set & Subject Property Performance
The competitive set consists of properties that are expected to compete with the proposed project for both business and conference/group room night demand. Properties in the set include the Holiday Inn Express, Quality Inn & Suites, Embassy Suites, Hampton Inn & Suites, and Courtyard by Marriott. In each year examined, the set outperformed the SLO market in both occupancy and ADR. B&D estimates the competitive set market segmentation in 2013 is 33% conference/group, 27% leisure, and 40% business. From 2011 to 2013, the set had an average weekday occupancy level of 80% in comparison to the SLO market at 67%, reflecting the set’s comparative focus on the business and group market segments.
The performance of the competitive set confirms hotelier and tourism official opinions that the market is underserved by the existing business- and group-oriented properties. To that end, B&D assumes that the property will be developed as an upper midscale property along the lines of a Hilton Garden Inn, Courtyard by Marriott, or Hampton Inn & Suites. Further assuming 145 keys, B&D projects an occupancy level of 68% in the first year of operation, 2020. The property occupancy level builds to 81% in 2022, the stabilized year, and increases to 85% in 2022 assuming a 2.0% consistent growth rate in demand. A snapshot of key performance metrics for the subject property is provided in Exhibit 2.4.
2007 2008 2009 2010 2011 2012 2013
National Occupancy 63% 59% 55% 58% 60% 61% 62%
SLO Occupancy 66% 63% 60% 62% 66% 67% 68%
National ADR $104.35 $107.42 $98.18 $98.23 $101.96 $106.26 $110.59
SLO ADR $116.99 $114.98 $107.46 $107.79 $109.59 $114.81 $118.58
Source: STR
E X H I B I T 2 . 2 : N A T I O N A L A N D L O C A L P E R F O R M A N C E C O M P A R I S O N
Year Market Supply
2008 208,780 0% 152,963 2% 73% $133.11 -1% $97.52 0%
2009 208,780 0% 148,064 -3% 71% $128.24 -4% $90.95 -7%
2010 208,780 0% 160,254 8% 77% $128.50 0% $98.63 8%
2011 208,780 0% 166,316 4% 80% $131.94 3% $105.10 7%
2012 229,360 10% 177,218 7% 77% $134.89 2% $104.22 -1%
2013 239,440 4% 190,247 7% 79% $136.67 1% $108.59 4%
Source: STR E X H I B I T 2 . 3 : C O M P E T I T I V E S E T P E R F O R M A N C E
EXECUTIVE SUMMARY
A u g u s t 2 0 1 4 2 . 5
Conference Center Analysis
The Cal Poly campus has a limited amount of dedicated conference space. Harman Hall is the largest space, but is often reserved for ticketed events. The most significant dedicated space is found at the University Union, which contains Chumash Auditorium, along with several small meeting spaces. In consideration of university personnel input, demand patterns from 2012 and 2013, and the existing inventory of spaces, B&D believes a conference center program of slightly over 22,000 sq. ft., including a ballroom of 12,000 sq. ft., is appropriate for university use.
University conference demand will be supplemented by commercial demand. The largest off- campus space is at the Madonna Inn Expo Center (20,000 sq. ft.) and the Embassy Suites 5,100 sq. ft. junior ballroom. B&D does not recommend inclusion of dedicated exhibt space, but instead suggests the university utilize the arena floor for consumer shows that contain a significant trade or consumer show component. Further, a 12,000 sq. ft. ballroom will allow the facility to satisfy both the vast majority of university demand, but also unaccommodated commercial demand.
FINANCIAL ANALYSIS
E V E N T S C E N T E R P R O J E C T E C O N O M I C S
The events center’s seating program provides a capacity of 5,500 seats in a basketball configuration. This recommended capacity will comfortably accommodate both tenant and outside event demand for the foreseeable future. The program includes six (6) luxury suites, 300 club seats, 60 courtside seats, and a 300-person hospitality lounge. The facility measures 166,000 square feet, assuming athletic administration offices are also included in the facility program. The detailed program is attached to this document as Exhibit C. B&D utilized the CSU Capital Outlay Form 2-7 to generate the budget based on a design-build schedule with completion in July 2020 and projected a project cost of approximately $107.4 million.
B&D developed three (3) financial scenarios for event center operations. The conservative scenario in the first year of operation, 2020, relies on 56 events (including 28 Cal Poly athletic
Year Property Supply
Demand Percent Change
2021 52,925 39,409 10% 74% $186.83 7.16% $139.11 18%
2022 52,925 43,114 9% 81% $199.82 6.96% $162.78 17%
2023 52,925 43,976 2% 83% $204.82 2.50% $170.19 5%
2024 52,925 44,856 2% 85% $209.94 2.50% $177.93 5%
Note: property Supply represents property room count multiplied by 365 days each year
E X H I B I T 2 . 4 : S U B J E C T P R O P E R T Y P E R F O R M A N C E
events) while the moderate and aggressive scenarios rely on 68 and 76 events, respectively. The conservative scenario generates an operating loss of $303,000 in 2020, while the moderate (loss of $136,000) and aggressive scenarios (profit of $29,000) exhibit improved performance. In the moderate scenario, considered the most likely, the average operating loss over the first five years is $114,000, annually. In these scenarios, naming rights is included as an annual revenue stream while net premium seating revenue, less ticket value to athletic events, also flows to the building.
H O T E L / C O N F E R E N C E C E N T E R P R O J E C T E C O N O M I C S
B&D recommends a 145-key hotel property with offerings similar to a Hilton Garden Inn or Hampton Inn & Suites. Affiliation with a “flag” is key to maintain appeal to the key business market segment, which places an emphasis on brand loyalty. The integrated hotel/conference center program measures 143,000 sq. ft. in total, including over 22,000 sq. ft. for the conference
Conservative Moderate Aggressive Events 56 68 76 Turnstile Attendance 132,510 163,510 184,510
Revenue 2020 2020 2020
Facility Rental $304,000 $368,000 $423,000 Gate Receipts, Net $0 $0 $0 Concessions, Net $294,000 $353,000 $405,000 Catering, Net $32,000 $32,000 $32,000 Merchandise, Net $4,000 $5,000 $6,000 Parking, Net $0 $0 $0 Advertising, Net $214,000 $214,000 $214,000 Naming Rights, Net $230,000 $230,000 $230,000 Premium Seating, Net $325,000 $325,000 $327,000 Ticketing $56,000 $71,000 $98,000 Facility Fees $150,000 $192,000 $230,000
Revenue Sub-Total $1,609,000 $1,790,000 $1,965,000
Expenses 2020 2020 2020
Expense Sub-Total $1,912,000 $1,926,000 $1,936,000
NOI (EBITDA) -$303,000 -$136,000 $29,000
Less: Capital Improvements -$200,000 -$200,000 -$200,000
NOI After Expenditures -$503,000 -$336,000 -$171,000
E X H I B I T 2 . 5 : C O N S E R V A T I V E , M O D E R A T E , A G G R E S S I V E S C E N A R I O S ( 2 0 2 0 )
EXECUTIVE SUMMARY
A u g u s t 2 0 1 4 2 . 7
center. Within the conference center, B&D recommends inclusion of a divisible, 12,000 sq. ft. ballroom to accommodate both university and commercial demand along with several additional spaces. B&D utilized the CSU Capital Outlay Form 2-7 to generate the budget based on a design- build schedule with completion in July 2020 and projected a cost of approximately $48 million.
The first three years of operation are shown below, with an operational profit of $2 million in year one, increasing to slightly over $4.3 million in year three of operation. Assumptions are developed on the basis of occupancy levels, 68% in year one and escalating to 81% in year three, yield penetration assumptions, and property alignment. The vast majority of overall revenue in year three is from rooms (58%) and food & beverage (28%), making up nearly 90% of total revenue. All financial projections contained herein assume development of an integrated hotel/ conference center and that the property will be operated in a business-oriented manner.
ECONOMIC IMPACT ANALYSIS
Construction and operations of each project will generate significant economic benefits. Benefits are measured in terms of employment, earnings, and output (economic activity). Though the construction benefits generate a significant one-time economic impact, recurring benefits over the project economic benefits will be more significant when measured by net present value (NPV). Exhibit 2.7 below summarizes one-time and recurring economic benefits from the project. The project will create a one-time impact that supports nearly 600 jobs, $31 million in earnings, and $132 million in economic activity. Further, recurring operations supports 133 jobs, $4.9 million in earnings, and $24.4 million in economic activity. Quantified over a 20-year span, the NPV of earnings is measured at an estimated $85 million, along with $420 million in economic activity.
E X H I B I T 2 . 6 : H O T E L P R O F O R M A ( 2 0 2 0 T O 2 0 2 2 )
Occupancy: 68% Occupancy: 74% Occupancy: 81%
Yield: 110% Yield: 115% Yield: 120%
Revenue % Revenue % Revenue %
Revenues Rooms 6,250,000$ 56% 7,360,000$ 57% 8,620,000$ 58% Food & Beverage 3,324,000$ 30% 3,748,000$ 29% 4,202,000$ 28% Conference Services 1,247,000$ 11% 1,405,000$ 11% 1,576,000$ 11% Other Departments 291,000$ 3% 328,000$ 3% 368,000$ 2%
Sub-Total 11,112,000$ 100% 12,841,000$ 100% 14,766,000$ 100%
[1] Expenses 9,069,360$ 82% 9,741,075$ 76% 10,436,450$ 71%
NOI (EBITDA) 2,042,640$ 18% 3,099,925$ 24% 4,329,550$ 29%
[1] Ex pense detail is prov ided in the pro forma
2020 2021 2022
N E X T S T E P S
This section addresses potential next steps for the University as it considers the events center complex development. If implemented, these steps should ensure that work completed to date is maximized. The following suggestions are based upon B&D’s experience with similar projects and reflect typical predevelopment activities that should be completed. The project team presents these ideas as suggestions, which will need refinement moving ahead:
Hold a strategic meeting at the conclusion of this study to identify a core working group that will lead the events center complex development process. The goal of the meeting should be to establish a project schedule, identify the appropriate party who serves as project director, and discuss potential outreach methods to public partners.
Conduct a detailed site analysis for the project to identify the best location on campus. B&D’s events center calendar assumes five annual trade shows that would utilize the arena floor on an annual basis, assuming the facility is located proximate to the hotel/conference center that would provide the necessary meeting space.
With an understanding of the economic benefits stemming from construction and operation of each project, Cal Poly should schedule a meeting with appropriate public parties to discuss the potential for public involvement.
Develop an anticipated sources and uses document for both projects. This document should be flexible so it can be adjusted quickly to changes in donor funding, operator- contributed capital funding, public funding, and capital campaign contributions.
Engage the athletic department in a detailed discussion with regard to event rents, ancillary revenue sharing formulas, premium seating fulfillment and revenue sharing, and potential assets for operation of the events center. B&D has made several material, “fair market” assumptions in this document with regard to tenant economics for the purpose of modeling likely profit and loss scenarios. Once terms are agreed upon, update the economics model accordingly.
Employment Earnings Output Income Tax
Construction 573 $31,431,000 $131,339,000 $727,000
Recurring 133 $4,933,000 $24,369,000 $113,000
20-Year NPV - $84,780,000 $418,790,000 $1,940,000
Note: 2.75% grow th rate is assumed along w ith 4% discount rate
E X H I B I T 2 . 7 : B E N E F I T S U M M A R Y
SECTION 3
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 1
3.0 – MARKET CONDITIONS
INTRODUCTION
The market conditions analysis provides an overview of demographic and socioeconomic conditions that influence demand for an event center project. This section reviews characteristics that influence demand for both of the project’s primary components, the events center and hotel/conference center. In forthcoming sections, analyses specific to the two project types are conducted to develop detailed demand projections for the events center and hotel/conference center components. The market conditions review contains several components, including:
An evaluation of market demographics through drive time analyses and analysis of regional population distribution;
A review of socioeconomic conditions in the market including unemployment trends, workforce composition; and
Analysis of transportation infrastructure, major attractions, and employers in the market.
B&D offers that no site evaluations have been made as part of this analysis. B&D assumes that, as part of the campus’ master-planning process, a suitable site will be identified for development of the project.
D E M O G R A P H I C A N A L Y S I S
M E T H O D O L O G Y
B&D utilized data provided by Environmental Systems Research Institute (ESRI) to complete a demographic drive time analysis of the San Luis Obispo market. ESRI combines geographic information systems (GIS) technology with extensive demographic, consumer, and business information to generate a detailed statistical profile of specific areas. Standard drive time radii defined the drive time area distances. Data was collected for the 30-minute, 45-minute, and 60- minute drive time areas from the Cal Poly, based on input from content providers that defined the local market as extending no further than one hour from the campus.
Definition of the Market
San Luis Obispo is located in San Luis Obispo County in the State of California. The County, City, and adjacent communities compromise the San Luis Obispo-Paso Robles Metropolitan Statistical Area (MSA). Defined by the federal government’s Office of Management and Budget, an MSA is a region with a densely populated core surrounded by less populated communities that possess a high degree of economic and social integration. The MSA is located roughly equidistant by drive time between the Los Angeles and San Francisco MSAs, two of the nation’s largest MSAs. Exhibit 3.1 shows the San Luis Obispo MSA, outlined in gold, in relation to both Los Angeles and San Francisco.
E X H I B I T 3 . 1 : R E G I O N A L M A P
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 3
San Luis Obispo is located on a secluded portion of the U.S. Route 101/California State Route 1 in California’s “central coast” region. The region’s mountainous topography means that, although some villages or towns may be more geographically proximate to San Luis Obispo, the drive time required to arrive in San Luis Obispo is totally dependent on the presence of a transportation artery. The map on the following page demonstrates the extent to which drive time areas are connected with major transportation arteries.
Exhibit 3.2 above shows 30-, 45-, and 60-minute drive time areas from San Luis Obispo. The 30- minute drive time is represented by the green shading, 45-minute by blue shading, and 60- minutes by the gold shading. As discussed above, drive times to San Luis Obispo are heavily dependent on the presence of a transportation artery – likely California State Route 1, 5, 227, or 58. The standard market for many sporting events, family shows, and concerts is generally considered to be 30-minutes, but may extend further into the 45- and 60-minute drive time areas depending on act type, frequency of the show, and advertising strategy.
E X H I B I T 3 . 2 : 3 0 - , 4 5 - , A N D 6 0 - M I N U T E D R I V E T I M E S
Demographic Characteristics
There are over 300,000 people within a 30-minute drive time of San Luis Obispo, expanding to over 450,000 in a 60-minute drive time area. Annual growth rates for each drive time area examined are projected to be limited in comparison to California and national levels through 2017. Average household size ranges from 2.65 to 2.75, which is comparatively smaller than the California average of 2.89 but greater than the national average of 2.58. Median household income for San Luis Obispo is nearly 10% less than the state average at roughly $53,000, but greater than the national average of just over $50,000.
Household income is a critical indicator of attendance. Higher income households, in theory, have elevated levels of discretionary income available for entertainment expenditures. In contrast, income levels are of minimal importance to potential conference attendance or hotel room night stays. Each of the three local drive time areas exhibit elevated household income levels in comparison to the national average, but is lower than the state-wide average.
Income Bracket 30 Minutes 45 Minutes 60 Minutes California United States
$24,999 and Below 21.5% 21.4% 21.6% 20.6% 24.7% $25,000 to $49,999 24.3% 24.5% 24.6% 22.7% 25.2% $50,000 to $74,999 20.1% 20.3% 20.3% 17.7% 18.6% $75,000 to $99,999 11.9% 11.7% 11.7% 11.9% 11.3% $100,000 to $149,999 13.3% 13.1% 12.9% 14.9% 12.0% $150,000 and Above 9.0% 8.9% 8.8% 12.3% 8.2% $75,000 and Above 34.2% 33.7% 33.4% 39.1% 31.5%
Source: ESRI Figures in 2012 unless otherw ise noted
E X H I B I T 3 . 4 : H O U S E H O L D I N C O M E D I S T R I B U T I O N
Category 30 Minutes 45 Minutes 60 Minutes California United States
Population 304,917 407,739 454,048 - - Annual Growth (Next Five Years) 0.53% 0.54% 0.50% 0.67% 0.68% Households 108,392 141,444 158,076 - - Average Household Size 2.65 2.75 2.75 2.89 2.58 Median Household Income $53,732 $53,477 $53,134 $57,385 $50,157 Median Age 36.5 36.1 36.0 35.8 37.3
Source: ESRI
Figures in 2012 unless otherw ise noted E X H I B I T 3 . 3 : 3 0 - , 4 5 - , A N D 6 0 - M I N U T E D R I V E T I M E D E M O G R A P H I C S
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 5
Regional Population Distribution
The region’s major population centers are Santa Maria, San Luis Obispo, Paso Robles, and Lompoc; collectively, the four cities represent 50% of the 60-minute drive time population. The remainder of the region’s population is distributed among several smaller communities. The region’s largest population center is Santa Maria, approximately 30 miles south of San Luis Obispo. The vast majority of the market population is to the south of San Luis Obispo, suggesting an event center would more closely compete with assembly venues to the south.
City Distance to SLO
Population Median HH
Income Average HH
Size Median Age
Santa Maria 33 99,553 $44,392 3.65 28.6 San Luis Obispo 45,119 $43,325 2.29 29.8 Paso Robles 29 43,563 $55,911 2.69 38.7 Lompoc 59 42,434 $44,100 2.90 34.0 Orcutt 39 28,905 $63,823 2.73 42.3 Atascadero 19 28,310 $59,998 2.52 41.0 Arroyo Grande 17 17,252 $59,690 2.40 30.9 Nipomo 25 16,714 $64,241 3.05 36.9 Los Osos 10 14,276 $68,303 2.37 46.9 Morro Bay 13 10,234 $57,775 2.08 48.9, $ ,
Source: US Census 2010
E X H I B I T 3 . 5 : R E G I O N A L P O P U L A T I O N C E N T E R A N A L Y S I S
Although Santa Maria is the largest city in the 60-mintue area, the city’s distance from SLO (33 miles), exceptionally high average household size (3.65), and mediocre median income levels suggest Santa Maria will offer a limited number of events center patrons. Lompoc, the fourth largest city in the market, also exhibits a similar demographic profile but is an even greater distance to San Luis Obispo (59 miles). Together, both Lompoc and Santa Maria comprise roughly one-third of the 60-minute population, but the demographics of each city suggest that only a small portion of each city contains target market patrons.
Unemployment Trends
San Luis Obispo County had an unemployment rate of 6.6% as of November 2013 according to the U.S. Bureau of Labor Statistics. The county rate is lower than that of California (8.5%) and the United States (7.0%). The current unemployment rate for San Luis Obispo has improved at a greater pace than California since both peaked in July of 2010. Overall, unemployment rates in San Luis Obispo from 2006 to 2013 have consistently been below the state average.
Largest Employers
B&D reviewed data published by the San Luis Obispo Chamber of Commerce to gain a greater understanding of the workforce composition in San Luis Obispo County. Six of the 15 largest employers in the region are educational organizations, while the remaining largest regional employers are a mix of healthcare or governmental entities. The mix of largest employers in the region suggests advertising and sponsorship revenues will be limited in comparison to peer event center projects around the nation.
2%
4%
6%
8%
10%
12%
14%
San Luis Obispo California
E X H I B I T 3 . 6 : H O U S E H O L D I N C O M E D I S T R I B U T I O N
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 7
Commercial Real Estate Market
The strength of the San Luis Obispo commercial real estate market is an important element in understanding the strength of the business sector and its corresponding need for conference space. In 2013, the average asking lease rate in San Luis Obispo was $2.75 per square foot for non-retrofitted buildings, a 57% increase from the previous year. Retrofitted buildings and shopping centers showed similar trends in asking lease rates, increasing by 46% and 37% from the prior year, respectively. Demand for office space grew in San Luis Obispo as vacancy rates dropped to 8.6% in 2013, strengthening from a rate of 13.6% during the previous year.
2011 2012 2013
Commercial Real Estate
Retrofitted Retail Buildings $2-$3/SF $2-$3.50/SF $4/SF
Office Vacancy Rate 12.60% 13.60% 8.60%
Shopping Centers
Source: San Luis Obispo Chamber of Commerce
Company/Organization Location Industry Number of Employees
County of San Luis Obispo San Luis Obispo Government 2,601
Cal Poly State Univ., San Luis Obispo San Luis Obispo Education 2,426
Atascadero State Hospital Atascadero Heathcare 2,200
California Men’s Colony San Luis Obispo Correctional Facility 1,768
Pacific Gas & Electric County wide Public Utility 1,719
Tenet Healthcare County wide Healthcare 1,409
Lucia Mar Unified School District San Luis Obispo Education 1,100
King Ventures San Luis Obispo Commercial 850
Paso Robles Public Schools Paso Robles Education 831
San Luis Coastal Unified School District San Luis Obispo Education 828
Cuesta College County wide Education 826
Albertsons Stores County wide Grocery Store 750
Atascadero Unified School District Atascadero Education 655
Wal-Mart Arroyo Grande Retail 620
Vons Countywide Grocery Store 528
Source: San Luis Obispo Chamber of Commerce
E X H I B I T 3 . 7 : M A J O R E M P L O Y E R S
E X H I B I T 3 . 8 : R E A L E S T A T E A N D O F F I C E V A C A N C Y
Airport Enplanement Statistics
Air connectivity is a key determinant of demand for conference centers. The region’s primary airport is San Luis Obispo County Regional Airport (SBP), which handled 127,336 enplanements in 2012. Enplanement at SBP dropped off sharply in 2008 and 2009, in part due to an overall decline in air travel and subsequent loss of air service to Salt Lake City on Delta Connection. Presently SBP has service to three major hub gateways (Los Angeles, San Francisco, and Phoenix) on two carriers, US Airways Express and United Express, though officials are actively soliciting United Express service to Denver and a re-launch of Salt Lake City.
Rail Ridership
The San Luis Obispo Amtrak Station provides an additional key transportation link to the San Luis Obispo region. The station serves as the northern point for Amtrak’s Pacific “Surfliner” which originates in San Diego, as well as a stop on Amtrak’s Coast Starlight train which travels from Seattle to Los Angeles. During 2013, the San Luis Obispo station had 115,028 boardings, making it the 28th busiest station in California. This ridership reflects a 6% increase from 2012.
Major Attractions
Attractions within San Luis Obispo County are instrumental in driving demand to the proposed facilities, particularly the hotel and conference center. Known for its leisure activities, the county attracts visitors looking to relax and enjoy the natural beauty of its undeveloped landscape. In addition to the university itself, a short sampling of the attractions that bring visitors to the area include:
Hearst Castle – Located in the northern portion of the county, Hearst Castle attracts around one million visitors a year despite being located far from the urban center.
150,732
138,884
142,959
141,649
158,107
127,336
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
SBP Passenger Enplanements
E X H I B I T 3 . 9 : S B P E N P L A N E M E N T S
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 9
Designated as a National and California Historical Landmark, visitors come to the mansion to see the site where celebrities of the 1920s and 1930s congregated.
Wine Country Vacations: As the third largest producer of wine in California, wine connoisseurs are attracted to the area year-round to visit the county’s wineries. In particular, visitors are drawn to the wineries within the Edna Valley and Arroyo Grande Valley. Given its proximity to the ocean, the growing conditions of the area produce a wine quality that is unique to San Luis Obispo.
Mission San Luis Obispo de Tolosa: Designated as a California Historical Landmark, the fifth oldest Spanish mission in the state is located within the urban center of San Luis Obispo. The unique design of the mission utilizes the elements of belfry and vestibule which are found in none of the other 20 California missions.
3.1 – EVENTS CENTER MARKET ANALYSIS
INTRODUCTION
The events center market analysis measures and evaluates the San Luis Obispo market’s ability to support an events center project on the campus of Cal Poly. This section builds upon the demographic and socioeconomic analyses completed in the market conditions review. The facility would serve as home to the men’s and women’s basketball programs and also host a number of outside events including concerts, family shows, and sports exhibitions. The findings of this section establish an outline for projecting an annual event calendar and the financial performance of an events center. Important to note is that the term “events center” and “arena” refer to the same building type. The primary difference between the classifications is typically based upon whether or not the facility actively pursues outside events.
METHODOLOGY
Utilizing primary and secondary sources, B&D completed a series of independent analyses to gain an understanding of San Luis Obispo’s economic, demographic, and entertainment marketplace conditions. Due to the uniqueness of the market and the multi-purpose nature of the project, B&D focused more on primary research and less on an analysis based on a comparable facility framework. Through the market analysis process, over 35 interviews were conducted with approximately 50 stakeholders. The following component exercises were completed to support the events center market analysis and the primary research processes(s):
A review of Big West arena characteristics and tenant attendance trends to inform the appropriate building capacity
Case studies on recently completed, representative scale arenas with NCAA Division-I tenants;
A review of existing regional arenas and other entertainment venues;
A review of premium seating offerings for recently completed arenas and/or similarly positioned NCAA Division-I programs; and
A series of interviews with content providers, including both regional and national producers and promoters.
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 11
C O N F E R E N C E F A C I L I T Y A N D A T T E N D A N C E A N A L Y S I S
The conference facility and attendance analysis is conducted to understand attendance trend’s for men’s and women’s basketball and inform capacity needs. Along with market niche, tenant capacity requirements are the most common determinant for arena seating capacities.
Big West Conference Arena Characteristics
The average arena capacity for Big West Conference arenas is just under 5,300. The smallest arena is at Cal State University, Northridge, whose “Matadome” has a capacity of 1,600, while the University of Hawaii possesses the largest venue at a capacity of 10,300. No venue has been completed since 1994 and all facilities are located on the campus of their respective university. In B&D’s experience, arenas constructed prior to 2000 were seldom rigorously planned or programmed. Accordingly, Big West arenas offer very little information that can be utilized to program a new Cal Poly event center project.
Institution Arena Capacity Per Game
Attendance1 Year Opened
Most Recent Renovation
California State University, Fullerton Titan Gym 4,000 1,185 1964 Planned
California State University, Long Beach Walter Pyramid 5,000 2,821 1994 2012
California State University, Northridge Matadome 1,600 1,119 1962 2012
University of California, Davis The Pavillion 8,000 1,718 1977 2009
University of California, Irvine Donald Bren Events Center 5,000 1,710 1987 -
University of California, Riverside SRC Arena 2,750 772 1994 -
University of California, Santa Barbara The Thunderdome 5,600 2,585 1979 -
University of Hawaii Stan Sheriff Center 10,300 6,053 1994 1998
Cal Polytechnic State University Mott Gymnasium 3,032 2,017 1960 2012
Big West Average - 5,281 2,245 1981
Source: NCAA; averages are over five year period from 2008 to 2012
E X H I B I T 3 . 1 . 1 : B I G W E S T A R E N A S
Tenant Attendance Review
B&D analyzed attendance figures from the Cal Poly Men’s and Women’s Basketball during the two most recent seasons to inform tenant capacity needs. The average attendance of the men’s basketball attendance was 2,075, while the women’s basketball team averaged 630 a game. Contests against rival UC-Santa Barbara drove attendance to the Mott Gym capacity of 3,032, slightly artificially deflating overall attendance levels. Given the comparatively greater per game attendance levels for men’s basketball, B&D utilized its attendance figures as the basis for determining the appropriate capacity for the purpose of tenant needs. Analysis of the competitive marketplace, which follows, further defines the appropriate capacity for an events center project.
From 2008 to 2012, Hawaii averaged nearly 6,000 spectators per men’s basketball game while the remaining BWC men’s basketball programs drew an average of roughly 1,700 spectators per game. Attendance at men’s basketball games peaked in 2004, at an average of nearly 2,800 patrons per game, and reached a minimum of 1,500 per game in 2009. In comparison to Big West attendance levels, Cal Poly attendance has been comparatively stable.
New collegiate arena projects often have an effect on per game attendance levels because of an improved fan experience, increased visibility associated with a program, and/or improved appeal
0
500
1,000
1,500
2,000
2,500
3,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Big West and Cal Poly Men's Basketball Attendance (2003 to 2012)
Big West Average
Cal Poly
E X H I B I T 3 . 1 . 3 : B I G W E S T A N D C A L P O L Y M E N ’ S B A S K E T B A L L A T T E N D A N C E
Per Game Attendance
Men Women
E X H I B I T 3 . 1 . 2 : C A L P O L Y M E N ’ S A N D W O M E N ’ S A T T E N D A N C E
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 13
to the student body. B&D collected a representative sample of recent arena projects to understand the effect a new arena had on per game men’s basketball attendance. For the three years prior to their respective arena’s opening, attendance levels for the set averaged 2,614 in comparison to per game attendance levels of 3,468 in the three years after opening, a net increase of 853 fans (32% increase). Such an increase would bring Cal Poly attendance levels to nearly 3,000 spectators per game for men’s basketball.
Year Opened Before Average After Average Net Increase/
Decrease
[1]Troy University 2012 1,874 1,858 -16 Bowling Green State 2011 1,597 1,713 117 College of Charleston 2008 3,154 3,608 454 Central Florida 2007 1,569 3,996 2,426 Northern Iowa 2006 3,961 6,097 2,136 Arkansas Little Rock 2005 4,114 3,599 -515 SUNY Binghamton 2004 2,032 3,402 1,370
AVERAGE 2,614 3,468 853
Source: NCAA
[1] Troy only has tw o y ears of attendance data av ailable
E X H I B I T 3 . 1 . 4 : E F F E C T O F A R E N A P R O J E C T O N A T T E N D A N C E
C A S E S T U D Y F A C I L I T I E S
The case studies are compiled to highlight current trends with arena construction and understand operational characteristics for arenas and events centers with intercollegiate athletic tenants. B&D identified five (5) recently completed facilities that best represent the desired size and scope of an arena project at Cal Poly. The findings contained in this section are utilized to project both capital and operating cost in the Financial Analysis.
College Park Center (Arlington, TX)
Opened in 2012, the College Park Center serves the University of Texas at Arlington’s (UTA) men’s and women’s basketball and volleyball programs. The arena cost $78 million and was supported by a private contribution of $10 million. The remaining funding for the project was raised as part of the College Park District, a 20-acre $160 million mixed-use development. The arena includes two practice courts, a sports medicine center, and strength and conditioning space. In FY 2012- 2013, the university-operated facility had income of just over $1 million in comparison to approximately $2.3 million in operational expenses.
Trojan Arena (Troy, AL)
Trojan Arena is located on the campus of Troy University and was opened in 2012. Trojan Arena is home to the university’s men’s and women’s basketball and volleyball teams and also accommodates commencement ceremonies, meetings, concerts, and special events. The $40 million, 149,000 SF arena has a seating capacity of 6,000 and was funded through a bond issuance designated for campus-wide capital improvements. The premium seating program at Trojan Arena includes 32 floor seats, 400 club seats, and seven luxury suites.
Jack Stephens Center (Little Rock, AR)
Opened in 2005, the Jack Stephens Center serves the men’s and women’s basketball and volleyball teams of the University of Arkansas-Little Rock. The arena cost $25 million to construct, made possible largely by a $20.4 million donation from billionaire philanthropist Jack Stephens. Attached to the arena is a practice gym, an academic support center, strength and conditioning space, and a Nike team store. Consistent with most recently constructed arenas, the Jack Stephens Center contains a variety of premium seating options, including 80 floor seats, 300 club seats, and 12 luxury suites.
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 15
SECU Arena (Towson, MD)
SECU Arena opened in 2013 on the campus of Towson University. The facility cost $56 million and has a capacity of 5,200 seats; hospitality spaces include five luxury suites, 340 club seats, 120 courtside seats, and 3,000 SF of flexible lounge space. Naming rights to the venue were secured for ten years at a value of $4.75 million; the agreement allows SECU to use one suite and the three hospitality spaces free of charge. According to university representatives, operating expenses for FY 2013-2014 are expected to total just over $1.3 million.
Stroh Center (Bowling Green, OH)
The Stroh Center was completed in 2011 and is home to Bowling Green State University men’s and women’s basketball and women’s volleyball teams. Funding for the $36 million Stroh Center was financed by a student government resolution that provided $22 million in funding via the application of a $60 per semester fee to each BGSU student. The remaining $14 million will be paid for with private donations, including a gift of over $8 million from former trustee Kermit Stroh. The facility’s operating budget for FY 2014 is just over $920,000.
Case Study Summary
The case study facilities have 2013 construction costs ranging from $39.1 million to $80.6 million while the three most recently completed facilities cost an average of $340 per sq. ft. Arenas examined exhibit a narrow range of square feet per seat, between 31 and 27 sq. ft. The College Park Center, which cost $80.6 million, is significantly larger than the other facilities by square footage due to the presence of a second fan concourse, something only SECU arena possesses. Operating budgets for the three facilities with data available range from $900,000 to $2.3 million and are in direct relation to square footage and seating capacity.
Opened: 2012 2005 2012 2013 2011
Operator: UTA UALR Troy University Towson University Global Spectrum
Seating Capacity: 7,000 5,600 5,200 5,200 5,000
Square Footage: 218,000 149,000 141,000 165,000 133,000
Operating Cost: $2,300,000 - - $1,300,000 $900,000
Project Cost (2013): $80,570,000 $37,680,000 $43,710,000 $56,000,000 $39,130,000
Sq. Ft. per Seat 31 27 27 32 27
Project Cost per Sq. Ft. $370 $253 $310 $339 $294
College Park Center
Center SECU Arena Stroh Center
E X H I B I T 3 . 1 . 5 : C A S E S T U D Y S U M M A R Y T A B L E
E V E N T S C E N T E R C O M P E T I T I V E C O N T E X T
The competitive context analysis evaluates the San Luis Obispo market and its ability to support a new events center within the context of the existing regional competitive environment. B&D developed an inventory of facilities to analyze venues that would compete with a new event center for either events, such as concerts or family shows, or potential patrons. Information was collected on each event facilities’ schedules, program data, financial performance, and seating inventories to identify niches not being accommodated by the current supply of facilities.
Primary Competitors
B&D reviewed public and private assembly venues in a three hour drive time area from San Luis Obispo. B&D identified 12 venues that could theoretically compete with a new event center for events or patrons at Cal Poly. However, four of the facilities, numbered 9 through 12 in the table below, cater almost solely to collegiate athletic programs and do not aggressively pursue revenue-generating events. The remaining eight (8) venues, deemed “primary competitors,” actively compete for revenue-generating events and are a mix of convention complexes, amphitheaters, and arenas. A depiction of the geographic relationship of each facility follows.
# Facility Capacity Opened or Renovated
Location Miles to SLO
(est.) Estimated Drive Time
1 Avila Beach Golf Course 4,000 - Avila Beach 10 15 Min
2 Paso Robles Event Center 7,582 1946 Paso Robles 30 30 Min
3 Chumash Casino 1,430 1994 Santa Ynez 65 1 Hr
4 Santa Barbara Bowl 4,652 1936/(2012) Santa Barbara 100 1 Hr 45 Min.
5 Save Mart Center 16,182 2003 Fresno 140 2 Hr 30 Min.
6 [1] Fresno Convention & Ent. Copmlex 9,123 1966 Fresno 140 2 Hr 30 Min.
7 Rabobank Arena 10,000 2002 Bakersfield 140 2 Hr 30 Min.
8 Event Center Arena 5,000 1989 San Jose 180 3 Hr
9 UCSB Event Center 5,814 1979 Santa Barbara 100
10 Kaiser Permanente Arena 2,505 2012 Santa Cruz 160
11 Firestone Fieldhouse 5,000 1973/(2013) Malibu 160
12 Leavey Center 4,500 1975/(2000) Santa Clara 190
Source: Mapquest, facility w ebsites [1] Selland Arena Capacity Note: Renov ation y ears are in parentheses
E X H I B I T 3 . 1 . 6 : C O M P E T I T I V E C O N T E X T T A B L E
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 17
E X H I B I T 3 . 1 . 7 : C O M P E T I T I V E C O N T E X T M A P
The Paso Robles Event Center is the most proximate to San Luis Obispo of the five primary competitors at 30 minutes to the northeast. The Santa Barbara Bowl, represented by the number four on the map, is an amphitheater venue nearly two hours to the south of San Luis Obispo. Fresno and Bakersfield each have arenas with capacities of 10,000 seats or greater, but due to the mountainous nature of the region, are each roughly two hours and thirty minutes from San Luis Obispo, depending on traffic. Detailed reviews of each of the venues follow.
Avila Beach Golf Resort
The Avila Beach Golf Resort is located just over 10 miles from campus in the city of Avila, CA. The golf resort holds outdoor events at its “Cove” venue overlooking Avila Beach. The Cove has a capacity for up to 4,000 patrons and operates seasonally from May through early November. While the resort has been open since 1969, it has provided mainstream performers for over 20 years. Since 2011, the Cove has held an average of 12-13 events a year through a mixture of themed
festivals and concerts. Notable performances during that time included Sheryl Crow, Incubus, and LMAFO. While smaller than the other event centers, the golf resort uses its large open space to accommodate bigger acts.
Paso Robles Event Center
The Paso Robles Event Center is a 40-acre convention center complex that includes a 7,587 seat equestrian arena. The event center hosts equestrian events, concerts, weddings, trade shows, and special events. The facility’s largest event is the 12-day Mid-State Fair that takes place at the end of July every year. The event attracts an annual crowd of over 400,000 attendees by featuring equestrian shows, livestock acts, carnivals, performances, display booths, and concerts.
Chumash Indian Casino
The Chumash Indian Casino is a Native American owned casino and hotel located in Santa Ynez. The Casino’s entertainment venue features a 1,400-seat facility that is exclusively promoted by Signature Entertainment and Promotions. In 2013, the venue hosted 31 events featuring performances by the Beach Boys, M.C. Hammer, LL Cool J, Styx, and a variety of stand-up comedians. The 30-minute drive time population surrounding the casino is much smaller at 84,000 people, less than a third of the San Luis Obispo market. Despite its smaller population base, the facility possesses a unique catchment area due to the adjacent casino property.
Santa Barbara Bowl
The Santa Barbara Bowl is a seasonal amphitheater located in Santa Barbara, CA that is operated by the Santa Barbara Bowl Foundation, a 501(c) (3) non-profit foundation. Opened in 1936, the amphitheater has a capacity of 4,562 and operates between the months of April and November. In 2013 the facility hosted 29 concerts including acts such as Jason Mraz, Sting, and the Lumineers. In comparison to San Luis Obispo, which has a 30-minute drive time population estimated at over 300,000, Santa Barbara is a smaller market with just over 200,000 people. Though the market is smaller on the basis of drive time population, the Santa Barbara Bowl likely accesses the northernmost portions of the Los Angeles MSA market for desirable acts.
Santa Barbara Bowl
Concert Capacity: 4562
30-Min Population: 200,922
45-Min Population: 338,654
Concerts (2013): 29
Source: Internet Research, SitesUSA 2013
E X H I B I T 3 . 1 . 8 : S A N T A B A R A B A R A B O W L O V E R V I E W
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 19
Save Mart Center
The Save Mart Center is a 16,182-seat arena located in Fresno, CA. The facility opened in 2003 at a construction cost of $103 million. The funding package included a 20- year, $42 million naming rights agreement with Save Mart and an exclusive, campus-wide pouring rights agreement with Pepsi Group in perpetuity. At the time, the $42 million naming rights contract was the largest aggregate naming rights value of any collegiate arena on record. The Save Mart Center also includes 40 luxury suites and 1,186 club seats and assesses a $20,000 flat rental fee vs. 20% of the gross receipts as a rental rate for outside events.
The Fresno State’s Men’s and Women’s Basketball teams are the building’s primary tenants. In 2013, the facility hosted an estimated total of 78 ticketed events, including 17 concerts, 12 family shows, and four floor shows. Notable events included Jay-Z, the Zac Brown Band, and Carrie Underwood. In comparison to SLO, Fresno offers a comparatively larger 30-minute population at over 840,000 people but competes with the Fresno Convention & Entertainment Center, discussed below.
Rabobank Arena
Rabobank Arena, Convention Center and Theater, is an event center complex that opened in 1998 in downtown Bakersfield, CA. Operated by AEG and owned by the city of Bakersfield, the facility was completed at a cost of $38 million. The arena has a capacity of 10,225 for concerts while the adjacent theater and convention center contains 17,740 sq. ft. of sellable floor space that can be re- configured to a 3,000-seat theater. In 2013, AEG took over management of the complex and the contract stipulates that the city will never lose in excess of $415,000 on an annual basis. Losses from 2009 to 2013 for the entire complex averaged $567,000, annually.
E X H I B I T 3 . 1 . 9 : S A V E M A R T C E N T E R O V E R V I E W
Save Mart Center
Location: Fresno, CA
Operator: SMG Opened: 2003
Source: Internet Research, SitesUSA 2013
In 2013 the facility hosted an estimated 100 ticketed events, 38 of which were tenant events. The complex’s two tenants are the Bakersfield Condors of the ECHL and the CSUB Condors Men’s Basketball team, which play half of their home games at Rabobank Arena. Other events included 21 concerts/theatrical events, 15 family shows, and four comedic acts, including Jerry Seinfeld.
San Jose State Event Center Arena
The Event Center Arena is located on the campus of San Jose State University (SJSU). The 5,000-seat facility was completed in 1989 and financed through student fees and facility revenues. Owned by San Jose State University and operated by the SJSU Student Union, Inc., the arena is home to the SJSU’s men’s and women’s basketball teams and women’s volleyball team. For outside events, the facility assesses an 11% share of gross receipts for facility rentals. In the 2012 to 2013 fiscal year, the facility generated $1.03 million in revenues while incurring nearly $2 million in expenses.
Outside events at the Event Center Arena primarily consist of alternative or electronic dance music (EDM) concerts such as DJ Tiesto and Steve Aoki. In 2013, the arena hosted an estimated 19 revenue-generating events, including 12 concerts. The arena is benefactor of a large market population, with over 2 million people in a 30-minute drive time.
Fresno Convention & Entertainment Center
The Fresno Convention & Entertainment Center opened in 1968 and has four different venues: the Fresno Convention Center, the Saroyan Theatre, Selland Arena, and the Valdez Exhibition Hall. The complex is managed by SMG and hosted 230 events and 500,000 spectators in 2012. Despite the considerable level of event activity, the complex has faced chronic operating deficits and lost an average of approximately $1.1 million from 2010 to 2012. As of January 2014, facility management and the City of Fresno is evaluating all options to curtail losses.
Event Center Arena
SJSU Spartans (M&W Basketball, W Volleyball)
E X H I B I T 3 . 1 . 1 1 : E V E N T C E N T E R A R E N A O V E R V I E W
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 21
The Fresno Convention Center is the only venue of the four that did not lose money on operations in 2012. Valdez Hall receives the least amount of utilization of the four venues, with an estimated 50 events annually, Selland Arena posted the most significant operating loss at $680,000; the arena hosted only 62 ticketed events in 2013, largely consisting of 17 family shows, 12 Fresno Monster junior hockey competitions, and 10 amateur sports competitions. According to event promoters, Selland Arena is offering generous deals in an effort to entice event promoters to utilize the building in place of the Save Mart center or Rabobank Arena.
Arena Event Totals
Event totals for indoor venues in 2013 are provided in Exhibit 3.1.13. The average arena facility had 76 ticketed events with an average of 31 tenant events and 45 non-tenant events. Arena facilities averaged 14 concerts, 13 family shows, and three wrestling/boxing/MMA events. In addition to the presence of Chumash Casino and the Santa Barbara Bowl, the marketplace for touring concerts appears saturated. Accordingly, most concert acts would likely be best suited marketed to the student audience.
Convention Center
Hall
Capacity (Seats): 5,000 2,340 9,123 3,000 Floor Sq. Ft.: 83,000 N/A 24,200 32,000 Utilization (230 Events): 30% 30% 20% 20% Rental Rate: $11,700 $3,300 $12,300 $2,250 2012 NOI EBITDA - ($340,000) ($680,000) ($260,000)
Source: Internet research
E X H I B I T 3 . 1 . 1 2 : F R E S N O C O N V E N T I O N & E N T E R T A I N M E N T C O M P L E X
Facility Ticketed Events
Santa Barbara Bowl 29 - 29 29 - -
Save Mart Center 78 30 48 17 12 3
Selland Arena 62 12 50 6 23 2
[1] Rabobank Arena 100 38 62 21 15 4
Event Center Arena 64 45 19 12 3 1
Arena Average 76 31 45 14 13 3
Source: Internet research, Pollstar Pro, facility w ebsites [1] Rabobank Arena ev ent totals include concerts in smaller theater setup
E X H I B I T 3 . 1 . 1 3 : C O M P E T I T I V E C O N T E X T E V E N T S U M M A R Y
P R E M I U M S E A T I N G R E V I E W
B&D reviewed premium seating offerings for recently completed/renovated arenas with similarly positioned basketball programs. The purpose of the review is to understand pricing relationships, inform appropriate price points, and gauge revenue potential. Prices shown in the table below include applicable donations, ticket prices, and leases. Figures do not include tickets to outside events, though leaseholders are normally given first right of refusal to purchase tickets to outside events prior to being placed on sale to the public.
Courtside seats, club seats, and luxury suites are offered in seven of the eight arenas. Courtside seats, which are located along the baseline and sidelines of the floor, have an average quantity of 72 seats at an average price point of $1,300. Club seats, which are similar to general admission seats but have access to a hospitality lounge, command a comparatively lower price point at $700. Loge boxes, which were first introduced in the early 2000’s, are only offered at Toledo for a price of $1,400 per seat. The average suite quantity is 11 with an average price point of nearly $22,000, annually. A donor survey could be conducted to add a level of refinement to the premium seating program, which is outlined in the financial analysis.
Institution Market Quantity Price Quantity Price Quantity Price Quantity Price
Arkansas Little Rock Little Rock 80 $2,462 300 $1,718 16 Varies Bowling Green St. Bowling Green (OH) 88 $773 400 $773 - - Old Dominion Norfolk 52 $6,250 836 $875 18 $24,500 [1] Texas at Arlington Dalls/Ft.Worth 51 $500 600 $300 3 $36,000 Toledo Toledo (OH) 84 $1,100 194 $682 85 $1,400 12 $15,000 Towson Baltimore 120 $1,180 340 $375 5 $10,000 Troy Montgomery (AL) 26 $750 500 $400 7 $18,000 Western Kentucky Bowling Green (KY) 32 $2,500 - - 16 $29,500
Average 67 $1,300 453 $700 85 $1,400 11 $22,200
Note: Includes required donation, ticket price, and lease if applicable; prices are mid-points [1] Suites contain 24 seats per suite; sold on indiv idual basis, but to groups larger than 20
Courtside Club Seats SuitesLoge Box Seats
E X H I B I T 3 . 1 . 1 4 : P R E M I U M S E A T I N G R E V I E W
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 23
3.2 – HOTEL/CONFERENCE CENTER MARKET ANALYSIS
INTRODUCTION
The hotel/conference center market analysis builds upon the market conditions review. This analysis measures and evaluates the San Luis Obispo market’s ability to support the hotel and conference center component of the project. The resultant outcome for this section is two-fold: quantify demand and average daily rate for room night stays and identify the appropriate program of spaces for a conference center. All projections are developed under the assumption that the hotel/conference center and events center will be introduced in tandem in 2020.
METHODOLOGY
The hotel demand analysis relies upon data provided by Smith Travel Research (STR), which provides detailed statistical information for a specified hotel market. B&D utilized this data as a framework to conduct further analyses, including:
A review of hotel inventory, quality, and location in relation to the University to understand the supply and caliber of properties available to those conducting business at the university;
A review of San Luis Obispo and national key performance metrics
The selection of five competitive properties to develop a “fair share” of demand analysis, including: average daily rates (ADR), and associated Revenue per Available Room and Revenue per Occupied Room projections (RevPAR and RevPOR).
Similar to the hotel analysis, the conference center demand analysis relies upon a hospitality industry publication, Trends in the Conference Center Industry 2013, to understand parameters associated with university conference center development. This publication is utilized, along with CVB and hotelier input and an analysis of competitive market supply, including university spaces, to develop a conference center program within the context of the recommended scale and size of the hotel.
HOTEL MARKET ANALYSIS
I N V E N T O R Y
There are 29 hotel properties in the City of San Luis Obispo and nearly 2,100 hotel rooms. The bulk of the inventory is concentrated economy and mid-scale properties in addition to niche, boutique style properties that primarily cater to a leisure target market. The largest property in the market is the Embassy Suites Hotel, which contains 195 rooms, followed by the Courtyard San Luis Obispo (139) and Quality Inn Central Coast (138). Hotels listed in the set below account for a significant percentage of conference space in the market, discussed in the next section.
B&D mapped each property with over 75 keys to understand where each competitor was located in relation to the Cal Poly campus. The 13 properties are clustered in two distinct areas; along California Highway 101, roughly three to four miles from campus, and just south of the University. The market’s two largest properties, the Embassy Suites and Courtyard, are located in the collection of hotels three to four miles away, just south of the iconic Madonna Inn.
Property Opened Rooms Property Opened Rooms
Embassy Suites San Luis Obispo Dec 1986 195 Rose Garden Inn Jun 1971 64 Courtyard San Luis Obispo Jul 2007 139 Ramada San Luis Obispo Jun 1964 61 Quality Inn Central Coast San Luis Obispo Nov 1986 138 Vagabond Inn San Luis Obispo Nov 1968 60 Motel 6 San Luis Obispo South Mar 1988 117 Avenue Inn Downtown San Luis Obispo - 51 Madonna Inn Jun 1958 109 Super 8 San Luis Obispo Feb 1989 49 Apple Farm Inn & Trellis Court Aug 1988 104 Best Western Somerset Inn Jun 1962 39 Holiday Inn Express San Luis Obispo Jun 1978 100 Travelodge San Luis Obispo Jun 1960 39 Best Western Plus Royal Oak Hotel Jun 1971 99 Peach Tree Inn Jun 1957 37 Motel 6 San Luis Obispo North Mar 1973 86 San Luis Inn Jun 1964 35 Hampton Inn Suites San Luis Obispo May 2012 84 Americas Best Value Inn San Luis Obispo Apr 1986 32 Comfort Inn & Suites Lamplighter - 77 Budget Inn - 27 Lexington Inn San Luis Obispo Aug 1997 75 San Luis Creek Lodge Aug 2002 25 La Cuesta Inn Jun 1985 72 Homestead Motel Jun 1971 18 Sycamore Mineral Springs Resort Jun 1935 72 Petit Soleil - 15 Sands Suites & Motel Jun 1985 70
Source: STR E X H I B I T 3 . 2 . 1 : H O T E L I N V E N T O R Y
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 25
The remaining properties with over 75 keys are located between one and two miles from campus and include the Holiday Inn Express-San Luis Obispo, Quality Inn Central Coast, and Comfort Inn & Suites Lamplighter. According to hoteliers and CVB officials, these three properties will closely compete for overnight stays for group and business market segments with a hotel property on the campus of Cal Poly.
Number Property
1 Courtyard SLO 2 Motel 6 South 3 Hampton Inn Suites 4 Motel 6 North 5 Embassy Suites SLO 6 Best Western Plus Royal Oak 7 Madonna Inn
Number Property
1 Apple Farm Inn & Trellis 2 Peach Tree Inn 3 Sands Suites & Motel 4 Holiday Inn Express SLO 5 Quality Inn Central Coast SLO 6 Comfort Inn & Suites Lamplighter
E X H I B I T 3 . 2 . 3 : H O T E L I N V E N T O R Y ( ~ 1 . 0 – 2 . 0 M I L E S F R O M C A M P U S )
E X H I B I T 3 . 2 . 2 : H O T E L I N V E N T O R Y ( ~ 3 . 0 + M I L E S F R O M C A M P U S )
S A N L U I S O B I S P O H O T E L M A R K E T P E R F O R M A N C E
From 2007 to 2013, San Luis Obispo has consistently posted higher occupancy percentages than the national market. The local market occupancy percentage bottomed out in 2009 at 60%, but has increased each year thereafter to a high of 69% in 2013. Further speaking to the local market’s high level of stability, the local market has rebounded and exceeded its 2007 occupancy percentage (66%) while the 2013 nationwide occupancy percentage (62%), is still below the 2007 level of 63%.
The average daily rate (ADR) for San Luis Obispo hotel properties in 2013 was $118.58, which represents a seven percent (7%) premium over the 2013 national ADR of $110.59. Average daily rate growth in the national market has outpaced San Luis Obispo ADR growth from 2007 to 2013. According to local hoteliers, the aging collection of hotel properties and associated levels of service and amenities have strongly contributed to the comparative lack of ADR growth.
66% 63%
60% 62%
San Luis Obispo Hotel Occupancy
National Occupancy
SLO Occupancy
E X H I B I T 3 . 2 . 4 : S L O H O T E L O C C U P A N C Y F R O M 2 0 0 7 T O 2 0 1 3
2007 2008 2009 2010 2011 2012 2013
National ADR $104.35 $107.42 $98.18 $98.23 $101.96 $106.26 $110.59
San Luis Obispo ADR $116.99 $114.98 $107.46 $107.79 $109.59 $114.81 $118.58
Growth -1.7% -6.5% 0.3% 1.7% 4.8% 3.3%
Variance 12.1% 7.0% 9.4% 9.7% 7.5% 8.1% 7.2%
Source: STR E X H I B I T 3 . 2 . 5 : S L O H O T E L A D R F R O M 2 0 0 7 T O 2 0 1 3
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 27
Revenue per available room night (RevPAR) is a commonly utilized metric that measures the extent to which hotels are maximizing financial performance. The measurement is calculated by multiplying the ADR by the occupancy percentage; accordingly, San Luis Obispo has an $82.28 RevPAR on the basis of a $118.58 ADR and 69% occupancy percentage. The table below depicts the growth of the San Luis Obispo hotel market RevPAR from 2007 to 2013.
The local hotel market is strongly seasonal; occupancy peaks in July and August at roughly 80%, while levels bottom out at under 50% in January and December. San Luis Obispo’s seasonal occupancy trends mirror conditions found in many hotel markets around the country that place a significant amount of reliance on the leisure market segment.
49% 59%
San Luis Obispo Hotel Occupancy by Month (2007 to 2013)
E X H I B I T 3 . 2 . 7 : S L O H O T E L M A R K E T S E A S O N A L I T Y
Year San Luis Obispo RevPAR Growth National RevPAR Growth
2007 $76.94 - $65.57 - 2008 $72.50 -6% $64.26 -2% 2009 $64.55 -11% $53.57 -17% 2010 $67.02 4% $56.48 5% 2011 $72.59 8% $61.07 8% 2012 $77.03 6% $65.16 7% 2013 $82.28 7% $68.74 5%
Source: STR
E X H I B I T 3 . 2 . 6 : S L O H O T E L R E V P A R F R O M 2 0 0 7 T O 2 0 1 3
C O M P E T I T I V E M A R K E T S E T
The competitive market set reviews hotel properties that are expected to compete with an on- campus property. Properties were selected which best represent the desired scope, scale, positioning, quality, and business model of an on-campus hotel property. B&D selected five properties that are shown below, summarized in the table, and discussed in the following text.
Holiday Inn Express (1)
Quality Inn & Suites (2)
Suites (4) Courtyard San Luis Obispo (5)
Classification: Upper Midscale Midclass Upper Upscale Upper Midscale Upscale [1] Miles to Campus: 1.48 1.58 3.74 4.73 4.78 Keys: 100 138 195 84 132 Meeting spaces: 2 1 12 2 7 Square feet of meeting space: 1,000 SF 480 SF 15,000 SF 990 SF 5,000 SF Largest contiguous space: 450 SF 480 SF 5,100 SF 990 SF 2,840 SF Max capacity of largest space: 65 30 600 90 400 Ballroom: No No Yes No Yes Catering: No No Yes No Only lunch Fitness Center: Yes Yes Yes Yes Yes
Source: Internet research, facility w ebsites
[1] Distance measured to campus center
E X H I B I T 3 . 2 . 8 : C O M P E T I T I V E S E T M A P A N D O V E R V I E W
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 29
Holiday Inn Express
Built in 1978, the Holiday Inn Express features 100 rooms located one mile from campus. The property features two meeting spaces at 450 square feet each, which can be combined into one room and accommodate a maximum of 65 people. The hotel does not provide on-site catering and relies on an outside company to cater meetings and events. Other than a complimentary breakfast bar, the hotel does not provide foodservice. Amenities include an unstaffed business center, a health and fitness center, complimentary Internet service, an outdoor pool, and same day dry cleaning. The property is designated by STR as an upper midscale class hotel.
Quality Inn and Suites
The Quality Suites Central Coast features 138 rooms, all of which are in suite configurations. Built in 1986, the property is located just over one mile from campus and is designated by STR as a midscale class hotel. The hotel contains only one meeting space at just under 500 square feet with the ability to accommodate 30 people in a classroom setting. While there isn't a restaurant on-site, a free Breakfast café is provided, as well as a barbecue outside each night except Sunday. Other amenities include complimentary Wi-Fi, free airport transportation, a business center, fitness room, and outdoor whirlpool.
Embassy Suites San Luis Obispo
The Embassy Suites hotel is located four miles from Cal Poly's campus. Built in 1986, the 195- room hotel is the largest in the city and is designated by STR as an upper upscale class property. The hotel features 15,000 square feet of meeting space spread out across 12 rooms. The 5,100 square foot Grand Ballroom is the largest of its kind in San Luis Obispo and has the capability to host an event for 600 people. Foodservice includes a free cooked-to-order breakfast, the Greenhouse Grill & Café for lunch and dinner, and a complimentary evening reception. The hotel also features a business center, an ATM machine, and baggage storage.
Hampton Inn & Suites
Built in 2012, the Hampton Inn & Suites is the newest of the 30 hotels surveyed by STR. It has 84 standard rooms and 21 suites and is designated by STR as an upper midscale class hotel. The property features two meeting spaces with 484 square feet per room, which can be combined into one room to accommodate groups as large as 90 people. The hotel does not have an extensive food and beverage operation and as a result is unable to provide catering services, instead relying on an outside catering company. Guest amenities include complimentary Wi-Fi, laundry services, a business center, fitness room, and indoor swimming pool.
Courtyard San Luis Obispo
Built in 2007, the Courtyard San Luis Obispo is one of the newest of the 30 hotels surveyed by STR. With seven meeting spaces spread out over 5,000 square feet, the Courtyard can accommodate groups as large as 400 in its 2,840 square foot ballroom. In addition, the hotel can cater lunches on-site for events, but must outsource catering for dinner functions. The property maintains a Courtyard Cafe within the hotel where breakfast and lunch are served. Also offered is complimentary Wi-Fi, a lounge area, a fitness center, and an outdoor heated pool and spa.
S U P P L Y A N D D E M A N D A N A L Y S I S
The hotel demand analysis is developed based on a “fair share” of demand analysis. This implies that, for every 100-key property in a 1,000-key marketplace, fair market share is 10% of corresponding market demand. Separate STR data was purchased to: inform estimated market segmentation among the competitive set, triangulate future ADR upon hotel opening, develop room night demand projections, inform a market-responsive room key figure, and ultimately determine financial viability based on per occupied room night spending assumptions.
Competitive Set Supply (2008 to 2013)
From 2008 to 2013, the competitive set outperformed the aggregate market in both occupancy and ADR. In each year, the competitive set had at least a five percent (5%) edge in occupancy over all properties. Further, the annual ADR is no less than $15 greater than the San Luis Obispo market hotels in each year. The competitive set also weathered recessionary conditions comparatively better, with only a seven percent (7%) RevPAR dip from 2008 to 2009 in contrast to 11% decrease for the entire SLO market. While the aggregate SLO market weathered recessionary conditions better than the national market, the competitive set is further insulated due to the lack of business and conference/group options in the City of San Luis Obispo.
Year Market Supply
2008 208,780 0% 152,963 2% 73% $133.11 -1% $97.52 0%
2009 208,780 0% 148,064 -3% 71% $128.24 -4% $90.95 -7%
2010 208,780 0% 160,254 8% 77% $128.50 0% $98.63 8%
2011 208,780 0% 166,316 4% 80% $131.94 3% $105.10 7%
2012 229,360 10% 177,218 7% 77% $134.89 2% $104.22 -1%
2013 239,440 4% 190,247 7% 79% $136.67 1% $108.59 4%
Source: STR E X H I B I T 3 . 2 . 9 : C O M P E T I T I V E S E T P E R F O R M A N C E
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 31
Estimated Segmentation
B&D has estimated the likely market segmentation of the competitive market set among three groups: conference/group, leisure, and business. Each market segment has unique tendencies with regard to price sensitivity, preferred days of the week for travel, typical length of stay, and purpose for the visit. An explanation of each segment is provided below:
Conference/Group: The group and conference market segment include those attending conferences, meetings, and SMERFE (social, military, educational, religious, fraternal, ethnic) events. Properties with significant on-site conferencing and meeting space are likely to attract SMERFE groups. Guests typically stay during weekdays and between two and three days in duration. This segment often patronizes a property under a complete meeting package arrangement (“CMP”), which guarantees ancillary revenues to a property through a pre-determined contract arrangement between the organizers and property.
Leisure: The leisure market segment largely consists of families or couples visiting a region for the purpose of visiting friends or relatives, passing through the region to another destination, or for sightseeing. The peak travel season is typically during summer months for this segment and, in contrast to the group/conference segment, most often patronizes hotel properties on weekends as opposed to weekdays.
Business: The business segment generates room night stays primarily from Monday to Thursday. The typical duration of stay is between one to three days. Business travelers are less rate sensitive and hotel property choices are often influenced by brand loyalty. Travelers place a high emphasis on amenities such as complimentary Wi-Fi, access to business centers, and on-site food and beverage.
Year Market Supply
2008 208,780 152,963 73% 33% 50,478 27% 41,300 40% 61,185
2009 208,780 148,064 71% 33% 48,861 27% 39,977 40% 59,226
2010 208,780 160,254 77% 33% 52,884 27% 43,269 40% 64,102
2011 208,780 166,316 80% 33% 54,884 27% 44,905 40% 66,526
2012 229,360 177,218 77% 33% 58,482 27% 47,849 40% 70,887
2013 239,440 190,247 79% 33% 62,782 27% 51,367 40% 76,099
Source: STR
E X H I B I T 3 . 2 . 1 0 : C O M P E T I T I V E S E T S E G M E N T A T I O N
B&D estimates the market segmentation for the competitive set is 33% conference/group, 27% leisure, and 40% business. Exhibit 3.2.11 below demonstrates that, while the competitive set benefits from weekend leisure travel (7% and 5% weekend variance), the greatest variance from the aggregate market is during weekdays – when conference/group market segments do the vast majority of their traveling. A comparison of seasonality also reveals that the competitive set is less seasonal, with occupancy dipping as low as only 60% in January from 2011 to 2013 for the set in comparison to 49% for the entire marketplace.
A significant amount of new supply is expected to enter the regional market in the next three years, including two entitled niche properties for San Luis Obispo. According to discussions with city officials, a 100-key, flagged property is also expected to enter the market in 2017 in addition to the two entitled properties. Accordingly, B&D makes the assumption this property will be part of competitive set supply, reflecting a 15% supply increase, as shown in Exhibit 3.2.12. Further, assuming introduction of the events center and hotel/conference center in tandem in 2020, each project will introduce an estimated 6,000 and 13,000 annual room nights of net new demand through new ticketed event and conference activity. The future estimated performance of the competitive set is provided below.
Su M T W R F Sa
2011 53% 58% 64% 67% 72% 73% 78% 2012 53% 58% 64% 66% 70% 77% 83% 2013 55% 61% 66% 67% 71% 79% 87%
Average 53% 59% 64% 67% 71% 76% 83%
2011 61% 72% 82% 85% 85% 83% 87% 2012 60% 70% 79% 82% 83% 82% 87% 2013 62% 73% 82% 82% 84% 83% 89%
Average 61% 71% 81% 83% 84% 83% 88% Variance 7% 12% 17% 16% 13% 7% 5%
Source: STR
Competitive Set
E X H I B I T 3 . 2 . 1 1 : D A Y O F W E E K V A R I A N C E
MARKET ANALYSIS
A u g u s t 2 0 1 4 3 . 33
The introduction of the conference and events center space will shift three percent (3%) of market segmentation from business to the conference and leisure market segments. Anticipated occupancy levels for the set will dip with introduction of a new property in 2017, but continue to grow thereafter with introduction of the new events center complex in 2020.
Subject Property Performance
In accordance with market niche, B&D assumes that a hotel project will be positioned similar to a Hilton Garden Inn and will be marketed to conference/group and business segments. B&D assumes the property will penetrate fair share of demand at 130% for conference/group, 40% for leisure, and 115% for business in the stabilized year of operation. The resultant room night demand based on anticipated demand trends is 36,000 in year one, escalating to 45,000 in year five, assuming no further supply increase. Average daily rate, assuming a 20% ADR/yield premium consistent with desired segmentation, ranges from $174 to $210. Property occupancy moves from 68% in year one to 85% in year five.
Year Market Supply
Conference Share Leisure Share Business Share
2014 239,440 - 194,052 81% 64,037 33% 53,442 28% 79,173 41% 2015 239,440 0% 197,933 83% 65,318 33% 53,442 27% 79,173 40% 2016 239,440 0% 201,892 84% 66,624 33% 54,511 27% 80,757 40% 2017 275,940 15% 214,929 78% 70,957 33% 57,601 27% 86,372 40% 2018 275,940 0% 219,228 79% 72,376 33% 58,753 27% 88,099 40% 2019 275,940 0% 223,613 81% 73,823 33% 59,928 27% 89,861 40% 2020 328,865 19% 257,085 78% 91,300 36% 69,127 27% 96,658 38% 2021 328,865 0% 262,227 80% 93,126 36% 70,509 27% 98,592 38%
Source: STR, B&D
2021 52,925 39,409 10% 74% $186.83 7.16% $139.11 18%
2022 52,925 43,114 9% 81% $199.82 6.96% $162.78 17%
2023 52,925 43,976 2% 83% $204.82 2.50% $170.19 5%
2024 52,925 44,856 2% 85% $209.94 2.50% $177.93 5%
E X H I B I T 3 . 2 . 1 2 : E S T I M A T E D C O M P E T I T I V E S E T S E G M E N T A T I O N
E X H I B I T 3 . 2 . 1 3 : S U B J E C T P R O P E R T Y P E R F O R M A N C E
CONFERENCE CENTER ANALYSIS
The conference center analysis examines conference center characteristics and program of spaces, university meeting space offerings, and demand patterns, and analyzes the off-campus conference space market. For the purpose of this analysis, B&D has conducted all research under the premise that this would be a college/university conference center. As defined by the International Association of Conference Centers, a university conference center is most often owned by the institution and caters extensively to college or university guests, executive MBA programs, and, to a lesser extent, the commercial market.
U N I V E R S I T Y C O N F E R E N C E C E N T E R C H A R A C T E R I S T I C S
Traditional conference centers contain at

events center complex feasibility study cal poly, san …

Documents